The Impact of Electronic Toll Collection on Fleet Managers and Leasing Companies

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1 Jim Glasheen Vice President of Sales and Marketing

2 Contents Introduction 1 Overview 1 The Issue 1 Interoperability 2 Options 3 A Better Solution 3 Summary 4 Introduction As funding for our nation s highways continues to shrink and traffi c numbers continue to climb, toll roads are increasingly becoming an answer to transportation issues. The result has been an explosive increase in the number of toll roads under development or under consideration throughout the country. More than 30 states have active toll bridges, roads or tunnels, and more are forecasted. In an effort to lower overhead costs, many toll authorities are shifting away from the traditional method of cash toll collection and are moving toward more innovative methods of toll collection, like video and open road tolling, where toll fees are collected electronically. However, each toll authority s electronic toll collection equipment is customized for its respective network and does not always work with other toll authorities equipment. U.S. Toll Road, Bridges, and Tunnels Map rise as drivers of their fl eet cars and trucks frequently miss or altogether ignore toll collection areas. As a result of missed toll fees, overhead costs increase as these fees and accompanying fi nes must be processed and paid. Overview Tolls have been collected manually (or in cash) for centuries. Roman property owners provided travelers with shortcuts in exchange for tolls. The process is simple: cash toll customers must stop at the toll booth or plaza, pay a toll and move on. It sounds simple, but when this process is repeated several times during one trip, it can result in traffi c congestion. Motorists are not the only ones affected by the manual tolling process. Employers lose productivity due to congestion. In addition, idling vehicles cause wear and tear on vehicles, burn fuel, and create pollution from the emission of ozoneproducing gases. Open road tolling uses electronic toll collection (ETC) lanes to supplement or replace manual cash toll collection. Toll usage data, captured by either video or transponder, is matched against vehicle information and billed to the user s account with the toll authority. ETC lanes allow traffi c to fl ow more smoothly by decreasing or eliminating manual toll collection and the need for cars to enter and exit main lane traffi c. If a vehicle does not have the equipment for the toll to be collected electronically, a bill for toll fees or a fi ne for failure to pay the toll is sent to the registered vehicle owner. The Issue While ETC decreases overhead for toll authorities, it increases overhead for both fl eet managers and leasing agents, due to the back offi ce costs necessary to process toll fees and fi nes. Most companies have the same process when it comes to an employee driving on toll roads in a company car: the employee pays the toll, turns in an expense report, and is reimbursed. However, the days of always having a cash option are over. What does this mean for fl eet managers and their leasing agents? It means that costly violations and fi nes are on the As ETC technology is deployed, many drivers receive unexpected toll violations when they travel on toll roads that use open road tolling (ORT) or cashless tolling, especially if they expect to have the cash payment option. Others might be unfamiliar with ETC or ORT toll roads and not realize they are on a toll road. Travelers from one state may not have the 1

3 appropriate toll transponder to use the ETC facility in a neighboring state, which creates another unintentional toll violation. The lack of interoperability between toll systems especially impacts fl eet and rental vehicles that travel throughout the United States. Still other vehicle owners will receive a toll violation when they replace an existing vehicle and do not register the transponder to the new vehicle. The Sam Rayburn Tollway (SH 121) became the fi rst all ETC cashless toll road in the Dallas-Fort Worth Metroplex (DFW). This 16-mile corridor will expand to 26 miles by 2012 and will be a major route from the airport to communities in the northwest portion of the Metroplex. After the fi rst portion of the Sam Rayburn tollway opened, one major rental car leasing company in the DFW Metroplex experienced a 400% increase in toll road violations more than 25,000 violations per month. When a cash option is not available and a car is not equipped with the appropriate toll transponder, the applicable toll authority uses video technology to obtain the vehicle license plate number. A bill for toll fees and/or fi nes for failure to pay the toll is sent to the registered vehicle owner. In the case of vehicle leasing companies, they receive the fi nes and must either pay the invoice and send it to the fl eet manager, or send it directly to the fl eet manager to pay. The longer it takes for the fee to be paid, the higher the fi nes. Violation charges and late fees can turn a single missed toll fee into thousands of dollars in fees, fi nes, overhead costs, and legal fees. When fi nes and fees are multiplied over several vehicles and several toll authorities, the impact to a company s overhead becomes substantial. A simple solution to avoid toll violation would be to outfi t the fl eet with transponders; however, the cost of a transponder averages $25.00 per vehicle. In addition an account must be set up with the toll authority, which requires a deposit of approximately $40 per vehicle to activate and maintain the toll account. A corporation would need to invest approximately $325,000 to equip 5,000 vehicles. Outfi tting the fl eet with individual transponders and setting up toll accounts still would not guarantee that the company would avoid costly toll violations, penalties and legal fees. As each toll authority frequently uses different technology to collect tolls electronically, a different transponder and account would be needed for every collection method. Manual or cash tolling reduces toll fi nes and fees to a certain extent, but there are some issues for fl eet managers and leasing managers. Toll booth lines cause traffi c congestion and, therefore, delays. In addition, motorists must have adequate money to pay tolls. Cash tolling may cause expense reporting irregularities or delays when receipts are lost or misplaced. When cash toll collection booths are missed or ignored by company drivers, it still results in fi nes and fees, which the leasing agent (the registered vehicle owner) and fl eet manager must resolve. Interoperability Interoperability means the ability to exchange toll and payment information between toll authorities. With the increase of different ETC technologies, the lack of interoperability among toll authorities can be a huge problem for fl eet drivers, their managers and the leasing agent. Without interoperability, it can be diffi cult for rental or fl eet vehicles to use ETC lanes, as drivers may pass through several different toll authorities on the way to a destination. A driver can utilize ETC equipment and still receive a fi ne if the ETC equipment did not work with various technologies used by different toll authorities. Electronic toll collection equipment at a toll gantry We re at a time of great potential. We ve got the technology, but we ve got to collaborate across agencies to use the technology to the maximum - J.J. Eden Chairperson/Alliance for Toll Interoperability 2

4 The Alliance for Toll Interoperability (ATI) is working toward a national interoperability solution among toll authorities. According to J.J. Eden, North Carolina Turnpike operations head and ATI chairperson, We re at a time of great potential. We ve got the technology, but we ve got to be creative in collaborating across agencies to use the technology to the maximum. * Future trends for toll collection are even more heavily dependent on electronic technology. The OmniAir Consortium is a private nonprofi t organization that focuses on researching and promoting interoperable, reliable and cost-effective dedicated short-range communications systems for the toll industry. Executive Director Tim McGuckin says, Upcoming technology offers the ability for different tolling systems to work together to achieve interoperability. ** Such technology includes: Odometer tolling, where mileage counting equipment is placed in the vehicle and uses GPS to report mileage for tolling purposes. Satellite tolling, where a satellite-based tracking system determines vehicle mileage for toll fees. Improved video tolling capabilities with clearer license plate capture. Compatibility between different electronic payment system. Upcoming technology offers the ability for different tolling systems to work together to achieve interoperability. -Tim McGuckin Executive Director/The OmniAir Consortium fee responsibility as the use of cash toll collection decreases and vehicles have no choice but to use ETC lanes. While the responsibility for toll payments could be shifted to the employee, several drawbacks exist. Work hours will be lost as employees are forced to use routes with manual toll lanes or no toll lanes. If toll fees are reimbursed, the employees must either present toll receipts or account for actual toll fees and not pad their expense report. When an employee accidentally uses or has no other option than to use an ETC lane, the leasing agency still has to invoice the fl eet manager for the fi nes and fees, which either the company or the employee must resolve. A Better Solution A better solution is to implement an innovative technology that will improve overhead and expense management. Rent A Toll (RTL) offers the only patented system that eliminates toll violation exposure, fi nes, and the work hours spent on processing and fi nes by leasing agencies and fl eet managers. Its toll fee tracking system utilizes video or transponder technology, depending on the area in which the vehicle operates, and integrates the electronic data exchange between leasing agencies and the respective toll authorities to provide accurate toll charges for fl eets. RTL s system is accepted by multiple toll authorities thoughout the United States. Use of the RTL system frees employees from tracking toll fees and using manual toll lanes. Options As discussed above, the transition to ETC cashless tolling may result in substantial overhead costs for fl eet and leasing companies due to the time involved to process, invoice, and pay toll fees and fi nes. Leasing agents and fl eet managers should consider how their companies or departments will handle toll road fees as manual payment options disappear. If fl eet managers and their leasing companies choose to continue to manage toll fees and fi nes in the same manner as they have in the past, overhead and operational costs may increase. More work hours may be needed to determine toll Traffi c fl owing through an ORT gantry 3

5 RTL solutions are easy to use, eliminate toll violation exposure and fi nes, and allow fl eet managers and leasing agencies to focus on their vehicles and employees instead of reconciling invoices. If fl eet vehicles are able to use ETC lanes without toll violation concerns, benefi ts include: Lower vehicle maintenance costs, as stopping and idling causes wear and tear on vehicles. Reduced overhead costs from eliminating back offi ce work to process violations and collect payments. Fewer delays at toll plazas, which means less travel time and fewer missed appointments and deadlines. Improved cash management resulting from the elimination of outfi tting vehicles with transponders. Summary Leasing companies, fl eet managers, and their drivers have much to gain from using RTL solutions. Overhead costs for processing and paying toll fees and fi nes are eliminated. Fleet drivers save time, which means increased productivity. Fleet managers should talk to their leasing agents about contacting RTL for fl eet toll management solutions. For additional information on how a Rent A Toll Fleet Solution can help your company, go to or contact us toll free at * April 2008 ** Traffi c congestion resulting from manual cash collection RTL solutions can be customized to meet each customer s unique business needs. In addition, each solution is fl exible and works with video or transponder technologies. 4

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